All of the IMF's Problems Now Belong to Christine Lagarde

The International Monetary Fund's newly-minted leader Christine Lagarde has a lot on her plate. As the 55-year-old French Finance minister replaces Dominique Strauss-Kahn as managing director, she'll be saddled with reviving a disgraced institution mired with challenges as Greece and much of Europe's debt woes rage on. Here's a look at how commentators are digesting her new leadership role at the lender of last resort and what it means for the institution in 2011.

She'll have to ready the fund for the coming debt crisis, writes Mohamed El-Erian at Financial Times:

Ms Lagarde must prepare the Fund’s balance sheet for the risk of some future financial impairment on account of the massive loans made in the past year, particularly to Greece. The sooner she does this, the less likely that the IMF will fall victim to behavior patterns the ECB seems to be stuck in – that of denying a solvency problem in a member country because too much of the sovereign debt now resides on the bank’s balance sheet. This trap converts institutions from being part of the solution to being part of the problem.

Her selection is a win for women, writes the Truth Dig blog: "For the first time in history, a woman will lead the International Monetary Fund," notes the blog. "Perhaps Lagarde was chosen to send a message since the IMF has gotten so much bad press over DSK’s alleged crimes against women, or maybe she’s simply the best available. Shelley DuBois at CNN Money agrees.

"[The IMF needs] a leader to represent a shift away from the kind of moral carelessness Strauss-Kahn had come to portray.

Regardless of his success at leading the IMF, his behavior (he had been known as a notorious womanizer even before the charges surfaced last month) was off-putting at best and dangerous to the organization during times of crisis, like now.

With Lagarde in charge of the IMF, Europe and the developed world got what they wanted. Lagarde faces the difficult task of reshaping the institution to become more relevant in a decentralized world where growth will come predominantly from under-represented emerging economies. Lagarde promised this would be one of her goals if she managed to get appointed as Managing Director, now she must prove it.

As a well-respected insider in European economic and political circles, Ms Lagarde has the clout and credibility to corral Europe into supporting further reforms at the IMF. Indeed, Mr Carstens may have been less likely to deliver on governance reforms (such as voting rights and representation on the executive board), despite his heart being in the right place, as he would have found it more difficult to overcome European resistance.

She may be the most qualified to bring change to the fund, writes Eswar Prasad, a senior fellow at Brookings.

As a well-respected insider in European economic and political circles, Ms Lagarde has the clout and credibility to corral Europe into supporting further reforms at the IMF. Indeed, Mr Carstens may have been less likely to deliver on governance reforms (such as voting rights and representation on the executive board), despite his heart being in the right place, as he would have found it more difficult to overcome European resistance.

She'll have to restore the fund's legitimacy, writes Mohamed El-Erian at Financial Times:

Ms Lagarde must strengthen the analytical robustness of the IMF’s response to debt crises. This should start with addressing the legitimate criticism that the institution’s role in the peripheral European bailouts was excessively influenced by political considerations, thus undermining its reputation of rigor and evenhandedness. In doing so, she would also enhance its ability to help address other systemic challenges, such as persistent global payments imbalances and deep-rooted structural rigidities that stifle employment creation.